embry mbaa518 2.5 - Problem Set 2

Quiz Instructions

Each module will have a problem set that is due at the end of the module. The module sets will consist of quantitative problems and will give you the opportunity to apply what you have learned. These problem sets are not timed and multiple choice. You will only have one opportunity to complete the problem sets. For Module 2 you will have 6 questions to solve. Questions 1, 2 and 3 are worth 5 points each. Questions 4, 5 and 6 are worth 10 points each. There is a total of 45 points.

Flag this QuestionQuestion 1 5 pts

Calculate the present value of:

PV	Years	Interest Rate	FV
	6	3 (pct)	5200

6209.07

4,366.02

4354.92

Flag this QuestionQuestion 2 5 pts Skip to question text.

Calculate the EAR given the following:

Stated Rate (APR, pct)	Compounding Period	EAR
6	monthly	?

6.17%

5.84%

6.15%

Flag this QuestionQuestion 3 5 pts Skip to question text.FASM Bank has designed a security that will pay a dividend of $10.00 in perpetuity. The dividend will be paid semi-annually and the initial dividend will be paid one half year from today. What is the price of the security if the stated annual interest rate is 5.5 percent, compounded semi-annually?

$181.82

$363.64

$1090.91

Flag this QuestionQuestion 4 10 pts Skip to question text.You have just been offered a job. Your base salary will be $75,000 per year and the first year’s annual salary will be received one year from the day you start working. You receive a bonus immediately of $12,500. Your salary will grow 4 percent per year and you will receive a bonus of 10 percent of your salary. You expect to work 30 years. Your discount rate is 10 percent. What is the present value of your offer?

$1,130,786.31

$1,131,922.67

$1,135,484.47

Flag this QuestionQuestion 5 10 ptsA European bond has a par value of 1000 Euros, a coupon rate of 4.5 percent and a yield to maturity of 5.2 percent. The bond has 19 years to maturity. Coupons are made annually. What is the value of the bond?

968.39

916.77

948.38

Flag this QuestionQuestion 6 10 ptsABC Inc. has 7.0 percent coupon bonds on the market with 9 years to maturity. The bonds make semi-annual payments and currently sell for 110 percent of par. What is the YTM?

5.56%

6.36%

5.57%